In Mature Cloud Market, Cost Optimization is Top Enterprise Priority: ISG Study
July 22 2024 - 11:03AM
Business Wire
Survey of global cloud decision-makers finds
more than 50 percent of applications now in the cloud, more than
double the rate of 2022
With more than half of business-critical enterprise applications
now in the cloud, new survey research from leading global
technology research and advisory firm Information Services Group
(ISG) (Nasdaq: III) finds enterprises are even more focused on cost
savings and leveraging the cloud for AI.
The ISG Market Lens™ Cloud Managed Services Study interviewed
250 business leaders responsible for cloud decision-making
worldwide about their cloud priorities, plans and performance, and
found cloud maturity has doubled in the past two years. More than
50 percent of application categories are in the cloud in 2024,
compared with 23 percent in 2022, and cost optimization has become
a top strategic motivator for enterprise cloud services.
Thirty-four percent of respondents to the 2024 study cite cost
optimization of their cloud portfolio as a top priority, compared
with 19 percent who said cost was a key driver of cloud adoption in
2022. Cloud services spending now accounts for 17 percent of IT
budgets, the study found.
“Cloud priorities have expanded since our 2022 cloud study, when
flexibility and scalability were key priorities alongside cost,”
said Michael Dornan, principal analyst and co-author of the study.
“Cost optimization is now a clear priority, as enterprises want to
ensure that their spending is maximized for business success and
accelerating investments in AI.”
Cloud services performance, security and data accessibility are
also top enterprise cloud priorities and are the most common
service-level agreements (SLAs) between enterprises and providers
in their cloud provider ecosystem. Of those SLAs, 54 percent of
enterprises rate security as very good or excellent, closely
followed by service availability at 50 percent.
In contrast, fewer than 20 percent of survey respondents rate
their provider’s cost management highly. Delivery against business
value metrics, migration timelines and innovation also score
poorly, suggesting that while enterprise technology needs are
largely met, business needs are often not.
Data from the second-quarter 2024 ISG Index™ found the number of
AI-related projects increased about 60 percent in the trailing 12
months. AI projects now account for about 2.5 percent of revenue
among the top 10 service providers. That share could rise to 5 or
10 percent over time as proofs-of-concept lead to projects that can
scale.
“AI is playing a growing role in cloud strategies, with 26
percent of survey respondents saying empowering cloud applications
with AI capabilities is a top-three priority,” said Alex Bakker,
ISG Distinguished Analyst and co-author of the study. “In 2024,
enterprises are focused on utilizing cloud-based AI modules and
expanding cloud service provision to quickly leverage the benefits
of AI. In the longer term, demand for AI is expected to drive
growth in cloud spending across all categories, including private
cloud."
The ISG Market Lens Study also showed the proportion of survey
respondents who say they have business applications they can "lift
and shift" to the cloud has doubled since 2022 to 27 percent, while
the proportion re-writing applications from scratch has fallen to
19 percent, reflecting previous application enhancements that
prioritized future cloud migration. Fifty percent of respondents
expect to move future applications to the cloud with minimal
changes, leaving the architecture unchanged.
“IT leaders and the business leaders they support often differ
on their preferred approaches to cloud migration,” Bakker said.
“Business decision-makers want speed and are less likely to rewrite
applications, but our study found 57 percent of IT decision-makers
anticipate and prefer to rearchitect applications during migration.
Our study suggests CIOs will need to persuade business leaders
their preferred migration approach generates value for the bottom
line.”
The ISG Market Lens Cloud Managed Services Study was conducted
globally in globally in April and May 2024, and surveyed 250
executives with decision making responsibility for cloud business
and technology strategy.
ISG Market Lens buyer behavior studies combine findings from
surveys of senior-level global executives with expert ISG research
and analysis on market trends and strategic business initiatives.
Past studies explored a range of topics, including business process
outsourcing, digital sustainability,
AI, application development and maintenance, cost optimization,
cybersecurity, global capability
centers, network
modernization, banking and the future
workplace.
Contact ISG for more information on ISG Market Lens
research.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading
global technology research and advisory firm. A trusted business
partner to more than 900 clients, including more than 75 of the
world’s top 100 enterprises, ISG is committed to helping
corporations, public sector organizations, and service and
technology providers achieve operational excellence and faster
growth. The firm specializes in digital transformation services,
including AI and automation, cloud and data analytics; sourcing
advisory; managed governance and risk services; network carrier
services; strategy and operations design; change management; market
intelligence and technology research and analysis. Founded in 2006,
and based in Stamford, Conn., ISG employs more than 1,600
digital-ready professionals operating in more than 20 countries—a
global team known for its innovative thinking, market influence,
deep industry and technology expertise, and world-class research
and analytical capabilities based on the industry’s most
comprehensive marketplace data. For more information, visit
www.isg-one.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20240722455823/en/
Will Thoretz, ISG +1 203 517 3119 will.thoretz@isg-one.com
Julianna Sheridan, Matter Communications for ISG +1 978 518 4520
isg@matternow.com
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